Lansing and Dewpoint

The reelection campaigns of Lansing Mayor Virg Bernero and City Councilwoman Kathie Dunbar plan to or have returned $500 contributions to officials at Dewpoint Inc. The Lansing-based firm manages software for the city’s pension systems, but it is also being paid $1.25 million over two years to overhaul the city’s information technology.

The contributions appear to violate a state law that was amended this year to limit contributions from vendors who do business with public pension boards to elected officials with direct or indirect control over how public retirement system money is spent.

It’s unclear whether Councilwoman Jessica Yorko will do the same for a $500 contribution she received from Dewpoint CEO Andrew Kotarba, though she said she will comply with any campaign requirements. She had first learned of the issue on Monday night.

The refunds are the latest chapter examining the tech integration and consulting firm’s relationship with the city, which has been questioned in recent weeks by the city’s internal auditor, who wants more detailed accounting about what the city gets from Dewpoint.

“The relationship between Dewpoint and the City of Lansing appears to be a cozy one where services are purchased with ease and often without regard to providing detailed documentation for same,” Internal Auditor Jim DeLine wrote in a Nov. 22 report to the Council and administration.

DeLine was looking for line items explaining what Dewpoint did for $90 an hour totaling nearing $200,000. A July 5 purchase order for the company billed for 2,088 hours of work with little explanation. Lansing is paying Dewpoint on three fronts: For day-to-day “project management” work, a long-term infrastructure redesign of the city’s IT system and by the pension systems for software management.

Dewpoint is one of 19 businesses paid to oversee the pension systems. The list also includes consulting and investment firms.

Bernero is an ex-officio member of the city’s two retirement boards. The Council president appoints a Council member to serve on each. Council President Carol Wood, who serves on both the police and fire and employee retirement boards, said she was given legal advice that the contribution limitations extend to all eight Council members, because they are eligible to serve on the boards and are therefore indirectly qualified to make decisions on how assets are spent. The boards also include union, city and public representatives.

Kotarba gave $500 to Yorko’s campaign on July 27, campaign finance records show. The director of government solutions, Joe Findlater, gave $500 to Dunbar’s campaign on Aug. 2. Chief Operating Officer Ken Theis gave $500 to Bernero’s reelection campaign on Aug. 27.

A review of campaign finance reports shows that no other candidates in this year’s citywide elections accepted contributions from Dewpoint officials.

According to the state law, if the contribution was more than $350, the Dewpoint officials would need to discover it within four months and seek a refund within 60 days to avoid a violation.

“The campaign contribution in question is governed by a little-known new law that took effect earlier this year,” Bernero said in a statement. “The law itself permits the refunding of excess contributions within a certain time period to avoid a violation of the contribution limits. My campaigns always strive to fully comply with all applicable laws, rules and regulations, and in this case we will return the entire contribution, even though we are not required to do so by the new law.”

On Monday night, Dunbar said that her campaign treasurer, Dylan Hellus, returned the contribution to Findlater after the Nov. 5 election, but she could not provide specifics of when and why it was returned. Hellus could not be reached for comment. Yorko first learned of the discrepancy on Monday night when the Council was provided a memo from City Attorney Janene McIntyre backing a legal opinion by outside counsel.

A request for comment from Dewpoint officials was referred to Theis, who did not respond.

As part of the changes to Public Act 314 that took effect in March, a disqualifying contribution must have been made after March 28; it must have been made to a candidate who could “potentially influence the selection of service providers”; it was more than $350 for a candidate running in an election in which the contributor was eligible to vote; and, if the employee was hired after the contribution, it was made within six months of the employee being hired. It appears all three contributions are in violation until they are at least partially returned.

According to documents provided to City Pulse showing quarterly expenses for both the Employees Retirement System and the Police and Fire Retirement System, Dewpoint was paid $9,588 between April 1 and Sept. 30 for “software project” work on the retirement systems.

The city also has a two-year, $52,000 a month infrastructure agreement with the company to launch Lansing’s forthcoming Information Technology Department that was part of Bernero’s budget this fiscal year.

The city’s relationship with Dewpoint started in 2008. The IT company has worked on several projects and assists in day-to-day IT needs.

At a Council Committee of the Whole meeting last week, administration officials presented the Council with a copy of the two-year infrastructure management agreement, but it did not have written records of the hourly work.

“The lack of detailed documentation for Project Management services being provided and invoiced by Dewpoint is disturbing,”

DeLine wrote.

Lansing Chief Operating Officer Chad Gamble explained last week that Dewpoint updates the city’s servers and programming, schedules software updates “that haven’t been performed in a very long time” and secures the city’s IT network.